Question

In: Accounting

The accounting records of Wall’s China Shop reflected the following balances as of January 1, Year...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, Year 2:

Cash $

18,900
Beginning inventory 19,135 (215 units @ $89)
Common stock 15,900
Retained earnings

22,135

The following five transactions occurred in Year 2:

  1. First purchase (cash) 120 units @ $91
  2. Second purchase (cash) 195 units @ $99
  3. Sales (all cash) 365 units @ $191
  4. Paid $15,200 cash for salaries expense
  5. Paid cash for income tax at the rate of 25 percent of income before taxes

Required

  1. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow.
  2. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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